SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No.1)
under the Securities Exchange Act of 1934
OEC Compression Corporation
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
420258 10 5
(CUSIP Number)
Dennis W. Estis
228 Industrial Street
West Monroe, Louisiana 71292
(318) 288-4930
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 16, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ].
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CUSIP NO. 420258 10 5
OEC COMPRESSION CORPORATION
1. Names of reporting persons: Dennis W. Estis
IRS Identification Nos. of above persons (entities only):
2. Check the appropriate box if a Member of a Group (see instructions):
(a) [ ]
(b) [ ]
3. SEC use only:
________________________________________________________________________
4. Source of funds (see instructions): OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e):
6. Citizenship or Place of Organization: U.S.
Number of shares beneficially owned by each reporting person with:
7. Sole Voting Power 5,539,154
8. Shared Voting Power 0
9. Sole Dispositive Power 5,539,154
10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each
reporting person: 5,539,154
12. Check box if the aggregate amount in Row 11 excludes certain shares (see
instructions):
13. Percent of class represented by amount in Row 11: 19.0%
14. Type of reporting person (see instructions): IN
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This Amendment No.1 to the Schedule 13D dated August 6, 1997 and filed August
15, 1997 by the filing person hereby amends the following items as follows:
ITEM 2. IDENTITY AND BACKGROUND.
Add the following to (c):
Dennis W. Estis ("Estis") is a director of OEC Compression Corporation (2501
Cedar Springs Road, Suite 600, Dallas TX 75201) and President and Chief
Operating Officer of Ouachita Energy Corporation (228 Industrial Street, West
Monroe, LA 71292), a wholly owned subsidiary of the Company.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Add the following:
The originally-filed Schedule 13D stated that 5,252,177 shares of Common Stock
were acquired by Estis in exchange for his stock holdings in a company that was
merged with the Company effective August 6, 1997. Estis actually acquired
5,252,178 shares in this merger. In January 1998, the Company issued an
additional 286,976 shares of Common Stock to Estis in settlement of a liability
to Estis which was assumed by the Company in the merger. Estis has not made any
other sales or purchases.
ITEM 4. PURPOSE OF TRANSACTION.
Add the following:
Since August 1997 and until November 1998, Estis held his shares for investment
only. However, as a result of disagreements with management over the direction
of the Company, Estis decided to review his investment objectives if other
significant shareholders were also concerned about their investment in the
Company. Estis entered into a shareholders' agreement with certain other
shareholders and formed a "group" that was subsequently dissolved when the
agreement described below was entered into.
Estis obtained proxies from two other shareholders and delivered a letter to the
Board of Directors of the Company dated November 10, 1998 indicating that Estis
was contemplating a proxy contest to remove and replace certain directors and
executive officers of the Company. Estis also demanded to inspect the corporate
records of the Company. On November 10, Estis and the two other shareholders
also filed a lawsuit against the Company and certain directors and executive
officers in state court in Oklahoma County, Oklahoma. This lawsuit was never
served on the other parties.
Following discussions between the Company and Estis, the parties decided to
resolve the issues raised by the November 10 letter and the lawsuit and to avoid
the necessity of a proxy contest. On December 16, the Company, Estis and the two
other shareholders entered into a Settlement Agreement, a copy of which is
attached as an exhibit and fully incorporated by reference herein.
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Among other things, the Settlement Agreement (i) prohibits Estis from
participating in any proxy solicitation relating to actions that were
contemplated in the November 10 letter to the Board, (ii) requires termination
of the proxies granted to him by the two other shareholders, (iii) requires
dismissal of the lawsuit, (iv) provides for a broad mutual release of claims
between the parties, (v) provides for a "standstill" agreement until June 30,
1999 (subject to extension or reinstatement as described below) prohibiting
Estis from participating in enumerated actions relating to control of the
Company and (vi) requires the Company to reimburse Estis for his out-of-pocket
expenses up to $35,000.
The Company has agreed to use its best effort to sell or assist Estis to sell at
least one-half of his shares of Common Stock at $2.00 or more per share. If such
a sale is not completed prior to June 30, 2000, then Estis's non-competition
agreements shall be terminated. If the sale by Estis occurs prior to December
31, 2001, then the standstill agreement described above will be extended or
reinstated, as the case may be, through December 31, 2001.
Estis and the Company have agreed to terminate his employment agreement.
Following such termination, he shall be entitled to certain payments and the
term of his non-competition agreements with the Company shall be reduced, all as
set forth in the Settlement Agreement.
Upon the sale of one-half of his common stock, Estis will also resign as a
director of the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Add the following to (a):
At the date of this filing, according to the Quarterly Report on Form 10-Q of
the Company for the quarterly period ended September 30, 1998 there were issued
and outstanding 29,161,543 shares of Common Stock of the Company. The number of
shares of Common Stock beneficially owned by Estis is 5,539,154, or 19.0 percent
of the Company's outstanding stock.
Add the following to (b):
Estis has sole voting power and sole dispositive power as to 5,539,154 shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Add the following:
On December 16, the Company, Estis and the two other shareholders entered into a
Settlement Agreement, a copy of which is attached as an exhibit and fully
incorporated by reference herein.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Add the following:
EXHIBIT NO. DOCUMENT DESCRIPTION
8 Settlement Agreement dated December 16, 1998.
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
DECEMBER 18, 1998
Date
/S/ DENNIS W. ESTIS
Signature
DENNIS W. ESTIS
Name/Title
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EXHIBIT 8
SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT (this "Agreement") is entered into as of this
16th day of December, 1998 by and among OEC Compression Corporation (the
"Company"), Ouachita Energy Corporation, a Delaware corporation (the "Operating
Sub"), Ray C. Davis ("Davis"), Kelcy L. Warren ("Warren"), Matthew S. Ramsey
("Ramsey"), Jack D. Brannon ("JBrannon"), Richard D. Brannon ("RBrannon"), James
D. Finley ("Finley"), Neal A. Hawthorn ("Hawthorn"), Jon P. Stephenson
("Stephenson" and together with Davis, Warren, Ramsey, JBrannon, RBrannon,
Finley and Hawthorn sometimes collectively referred to herein as the "Company
Group"), HACL, Ltd. a Texas limited partnership ("HACL"), Energy Investors, a
Texas joint venture ("Energy Investors"), Dennis W. Estis ("Estis"), Andy Payne
("Payne"), Don A. Smith ("Smith") and Robert Gregory ("Gregory" and together
with Estis, Payne and Smith sometimes collectively referred to herein to as the
"Shareholder Group"). The members of the Shareholder Group are sometimes
referred to herein collectively as "Members" and individually as a "Member." The
Company, the Operating Sub, Davis, Warren, Ramsey, JBrannon, RBrannon, Finley,
Hawthorn, Stephenson, HACL, Energy Investors, Estis, Payne, Smith and Gregory
are sometimes collectively referred to herein as the "Parties" and individually
as a "Party."
W I T N E S S E T H :
WHEREAS, Estis is a party to that certain Asset Purchase and Sales
Agreement dated May 15, 1997 by and among Estis, Ouachita Energy Partners, Ltd.,
Ouachita Compression Group, LLC, OEC Acquisition Corporation, and the Company,
as amended (the "Asset Purchase Agreement"); and
WHEREAS, Estis is also a party to that certain Agreement and Plan of
Merger dated May 15, 1997 by and among Estis, Ouachita Energy Corporation, OEC
Acquisition Corporation, and the Company, as amended (the "Merger Agreement");
and
WHEREAS, Estis is a party to that certain Employment Agreement dated as of
August 1, 1997 with the Company and the Operating Sub, as amended (the "Estis
Employment Agreement"); and
WHEREAS, Payne is a party to that certain Employment Agreement dated as of
August 1, 1997 with the Company and the Operating Sub, as amended (the "Payne
Employment Agreement"); and
WHEREAS, the transactions contemplated by the Asset Purchase and the
Merger Agreement (the "Purchase Transactions") were consummated as of August 1,
1997 and in connection with the consummation of the Purchase Transactions, Estis
became the Chief Operating Officer of the Company, President and Chief Operating
Officer of the Operating Sub and a member of the board of directors of the
Company and Payne became a senior vice president of the Operating Sub and a
member of the board of directors of the Company; and
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WHEREAS, in connection with the consummation of the Purchase Transactions,
Estis and certain of his affiliates and/or associates including Payne (the
"Estis Shareholders") became the owners of 7,886,976 shares of the Company's
Common Stock, $0.01 par value per share (the "Common Stock") as described on
Exhibit "A" attached hereto and incorporated herein (the "Estis Stock"); and
WHEREAS, Estis has obtained irrevocable proxies from each of Gregory and
Smith as to certain matters and has sent to Ray C. Davis a letter dated November
10, 1998 (the "November 10 Letter") indicating that Estis was contemplating a
proxy contest and has demanded to inspect the corporate records of the Company;
and
WHEREAS, Estis, Gregory and Smith have filed a lawsuit described on
Exhibit "B" attached hereto against the Company and each of the members of the
Company Group (the "Lawsuit"); and
WHEREAS, HACL and Energy Investors are significant shareholders of the
Company and the transactions contemplated by this Agreement will directly
benefit such shareholders; and
WHEREAS, the Parties desire to resolve and settle the issues raised by the
November 10 Letter and the Lawsuit and to end any proxy fight with respect to
the Company and its Common Stock;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledge, the Parties, intending
to be legally bound, hereby contract and agree as follows:
1. PROXY FIGHT.
1.1 TERMINATION OF EFFORTS TO CALL A SPECIAL SHAREHOLDER MEETING. Each of
the Members of the Shareholder Group and the Shareholder Group (a) shall
immediately terminate any and all activities with respect to their efforts to
call or solicit shareholder consents to call a special meeting of the
shareholders of the Company as described in the November 10 Letter (a "Special
Meeting"), (b) shall not, directly or indirectly solicit any proxies or
participate in any "solicitation" of any "proxy" (as such terms are defined in
Rule 14a-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) with respect to matters to be presented at a Special Meeting or otherwise
and shall not become a "participant" (as such term is used in Rule 14a-11 under
the Exchange Act) in any election contest relating to a Special Meeting or
otherwise, (c) shall promptly terminate all agreements and understandings
supporting the call for a Special Meeting, and shall promptly terminate any
"group" pursuant to Section 13(d) of the Exchange Act, to reflect the
termination of the proxy contest and the other provisions of this Agreement, (d)
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terminate any proxies granted by Gregory or Smith in favor of Estis, and (e)
shall not take any other actions inconsistent with the matters contemplated
hereby; provided, however, that (i) the Shareholder Group may file an amended
Schedule 13D and any other filings required by law that are not inconsistent
with the restrictions and provisions set forth in this Agreement and (ii) that
certain Shareholder's Agreement among Estis, Smith and Gregory (the "Shareholder
Agreement") shall survive until December 31, 1999. Prior to the date hereof, a
true and complete copy of the Shareholder Agreement has been provided to the
Company. Prior to filing any Schedule 13d or amended Schedule 13d, the
Shareholder Group will provide the Company with a copy of such filing and will
make any reasonable changes or clarifications requested by the Company or its
counsel so as to reflect the intent of this Agreement.
1.2 DISMISSAL OF THE LAWSUIT. On the date hereof, each Member of the
Shareholder Group and the Shareholder Group agrees to dismiss with prejudice the
Lawsuit and to file the Notice of Dismissal attached hereto as Exhibit "C" and
incorporated herein. In addition, each Member of the Shareholder Group, the
Shareholder Group, the Company and the Company Group each agree to use their
best efforts to cause the pleadings in the Lawsuit to be sealed and agree to
file a joint motion to seal such petition.
1.3 RELEASE BY THE SHAREHOLDER GROUP. The Shareholder Group and each
Member of the Shareholder Group hereby RELEASES, DISCHARGES and ACQUITS the
Company, the Operating Sub and their officers, directors, agents and
representatives (including each member of the Company Group) from any and all
claims, grievances, demands, charges, liabilities, obligations, actions, causes
of action, damages, costs, losses of services, expenses and compensation of any
nature whatsoever existing on the date hereof, whether based on tort, contract
or other theory of recovery, which any Member of the Shareholder Group now has
of any kind or nature, including, on account of, or in any way growing out of or
related to the operation of the Company or the Operating Sub prior to the date
hereof including any and all claims raised or discussed in the November 10
Letter or in the Lawsuit and further including any written or oral statements
made by any member of the Company Group. Notwithstanding any provision of this
Section 1.3 to the contrary, this Section 1.3 does not release, modify, amend or
change in any manner the rights of the Members of the Shareholder Group under
(i) that certain Registration Rights Agreement dated as of August 1, 1997
executed by the Company, Estis and others in connection with the consummation of
the Purchase Transaction, (ii) the right of Andy Payne to any stock options
vested or earned on the date hereof, (iii) any compensation earned by any Member
of the Shareholder Group prior to the date hereof or (iv) the rights of the
selling parties under the Merger Agreement or the Asset Purchase Agreement or
otherwise related to the Purchase Transactions.
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1.4 RELEASE BY THE COMPANY AND THE COMPANY GROUP. The Company and each
member of the Company Group hereby RELEASES, DISCHARGES and ACQUITS the
Shareholder Group and each Member of the Shareholder Group for any and all
claims, grievances, demands, charges, liabilities, obligations, actions, causes
of action, damages, costs, losses of services, expenses and compensation of any
nature whatsoever existing on the date hereof, whether based on tort, contract
or other theory of recovery, which the Company or any member of the Company
Group now has any kind or nature, including, on account of, or in any way
growing out of or related to (i) the operation of the Company or the Operating
Sub prior to the date hereof, (ii) their actions as employees, officers or
directors of the Company or any of its subsidiaries (including any claims for
misappropriation of funds or improper expense reimbursements from the Company),
(iii) any breaches of either the Estis Employment Agreement by Estis or the
Payne Employment Agreement by Payne (iv) the filing of the Lawsuit, (v) the
matters raised by the November 10 letter and any oral or written statements made
by any member of the Shareholder Group prior to the date hereof pertaining to
the Company or any member of the Company Group made in connection therewith or
herewith or (vi) the solicitation of proxies by the Shareholder Group.
Notwithstanding any provision of this Section 1.4 to the contrary, this Section
1.4 does not release, modify, amend or change in any manner the rights of the
Company under the Merger Agreement or the Asset Purchase Agreement or otherwise
related to the Purchase Transactions or under the notes owed by any Member of
the Shareholder Group to the Company or the Operating Sub.
1.5 STANDSTILL AGREEMENT. During the period commencing on the date hereof
and ending June 30, 1999 (the "Standstill Period"), each Member of the
Shareholder Group:
A. shall cause all shares of capital stock of the Company which have
the right to vote generally in the election of directors, including,
without limitation, shares of Common Stock (collectively, the "Voting
Stock"), that are beneficially owned (within the meaning of Regulation 13D
and Rules 13d-3 and 13d-5 under the Exchange Act) by such Party to be
present, in person or by proxy, at all meetings of the shareholders of the
Company so that all such shares may be counted for the purpose of
determining if a quorum is present at such meetings and (ii) to be voted
in favor of persons nominated and recommended by the Board of Directors of
the Company in the election of directors for the 1999 meeting of the
shareholders of the Company;
B. shall not, directly or indirectly, solicit any proxies or
consents with respect to Voting Stock or in any way participate in any
"solicitation" of any "proxy" with respect to shares of Voting Stock (as
such terms are defined in Rule
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14a-1 under the Exchange Act) or become a "participant" in any election
contest with respect to the Company (as such term is used in Rule 14a-11
under the Exchange Act) or request or induce or attempt to induce any
other person to take any such actions or attempt to advise, counsel or
otherwise influence in any way any person with respect to the voting of
Voting Stock;
C. except as provided in the Shareholders Agreement, shall not (i)
form, join or otherwise participate in any "group" (within the meaning of
Section 13(d)(3) of the Exchange Act or Rule 13d-5 thereunder) with
respect to any Voting Stock (a "13D Group"), (ii) otherwise act in concert
with any other person for the purpose of holding or voting of Common
Stock, or (iii) file any amendment to any Schedule 13D that relates to a
plan or proposal referred to in paragraphs (d) or (g) of Item 4 of
Schedule 13D or that contains any statement that is in any way
inconsistent with the provisions of this Agreement;
D. shall not deposit any Voting Stock in a voting trust or subject
any Voting Stock to any arrangement or agreement with respect to the
voting of such Voting Stock or other agreement having similar effect;
E. except as expressly contemplated hereby, shall not make any
proposal (including any proposal pursuant to Rule 14a-8 under the Exchange
Act) or bring any business before any meeting of the shareholders of the
Company and, other than actions proposed or taken at any meeting of the
Board of Directors, shall not take or seek to take any action in the name
or on behalf of the Company except pursuant to the performance of any
responsibilities attendant to any office in the Company held by such Party
or pursuant to a resolution adopted by the Board of Directors;
F. not acquire, propose to acquire (or publicly announce an
intention to acquire by purchase or otherwise any Voting Securities or
propose (or publicly announce or otherwise disclose an intention to
propose) solicit, offer, seek to effect, negotiate with or provide any
confidential information relating to the Company or its business to any
Person (as defined in Section 3(a)(9) of the Exchange Act) with respect to
any tender or exchange offer, merger, consolidation, share exchange,
business combination, restructuring, recapitalization or similar
transaction involving the Company;
G. shall not (i) seek election to, nor seek to place a
representative on the Board of Directors of the Company, (ii) seek the
removal of any member of the Board of Directors, (iii) call or seek to
have called any meeting of the
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shareholders of the Company for any purposes, (iv) take any other action
to control the Company, or (v) demand, request or propose to amend, waive
or terminate the provision of this Section 1.5; and
H. shall not enter into any discussions, negotiations, arrangements
or understandings with any other person with respect to any of the
foregoing matters referred to in this Section 1.5;
provided, however, that clauses (B), (C) and (D) and (insofar as it relates to
clauses (B), (C) or (D), clause (H) of this Section 1.5), shall not prevent any
Party from taking any of the actions referred to in such clauses to the extent
(but solely to the extent) that such actions are taken in response to (i) any
"Extraordinary Proposal" (as hereinafter defined) that is set forth in any
preliminary or definitive proxy statement filed by the Company with the
Securities Exchange Commission (the "SEC") or (ii) tender shares of Voting Stock
to an unaffiliated third party in connection with any tender offer or takeover
proposal from an unaffiliated third party not solicited, directly or indirectly
by the Shareholder Group. For purposes hereof, an "Extraordinary Proposal" shall
mean any proposal of the Company other than a proposal regarding any of the
matters referred to in clauses (1) - (4) of Rule 14a-6(a) under the Exchange
Act, as in effect on the date of this Agreement.
1.6 REIMBURSEMENT As partial compensation for the reformation of Estis'
agreement not to compete against the Company as set forth herein and the
releases set forth herein, the Company shall reimburse and/or pay on behalf of
the Shareholder Group one-half of the reasonable out-of-pocket costs and
expenses of the Shareholder Group incurred in connection with their activities
prior to the date hereof with respect to their solicitation of proxies in
connection with the proposed Special Meeting, provided however, such
reimbursement by the Company shall not exceed $35,000. Such amounts shall be
paid by the Company within five business days after receipt of appropriate
evidence of the amount and nature of such costs and expenses in form reasonably
satisfactory to the Company. The Company agrees that satisfactory evidence of
such fees will be an affidavit of Ed Rogers stating that (i) his firm is not
representing the Shareholder Group or any Member of the Shareholder Group as to
any other matter other than the matters described in this Agreement, (ii) the
total fees of the Shareholder Group related to calling a special meeting of the
shareholders, the November 10 Letter, and the Lawsuit are in excess of $70,000
and (iii) attached to such affidavit is a true and correct summary of (a) the
hours worked on behalf of the Shareholder Group on such matters, (b) the
attorneys working such hours and (c) the dates that such hours were worked.
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1.7 CHANGE OF CONTROL. If a Change of Control (as hereinafter defined) of
the Company occurs during the Standstill Period in which the shareholders of the
Company receive less than $2.00 per share, then the Standstill Period will be
terminated. A Change of Control of the Company shall be deemed to take place on
the occurrence of any of the following events: (1) the Continuing Directors no
longer constitute at least two thirds (2/3) of the total number of directors of
the Company; (2) any person or group of persons (as defined in Rule 13d-5 under
the Exchange Act), together with its Affiliates, become the beneficial owner,
directly or indirectly, of fifty-one percent (51%) of the Company's then
outstanding Common Stock, or fifty-one percent (51%) or more the total voting
power of the Company's then outstanding securities entitled generally to vote
for the election of the Company's directors; (3) the approval by the Company's
shareholders of the merger or consolidation of the Company with any other
corporation or business organization, the sale of substantially all of the
assets of the Company or the liquidation or dissolution of the Company, unless,
in the case of a merger or consolidation, the continuing Directors in office
immediately prior to such merger or consolidation will constitute at least
two-thirds (2/3) of the directors of the surviving corporation or business
organization resulting from such merger or consolidation and any parent (as such
term is defined in Rule 12b-2 under the Exchange Act) of such corporation or
business organization; or (4) at least two-thirds (2/3) of the continuing
Directors in office immediately prior to any other action proposed to be taken
by the Company's shareholders or by the Company's Board of Directors determine
that such proposed action, if taken, would constitute a Change of Control of the
Company and such action is taken. Notwithstanding any provision of this Section
1.7 to the contrary, a Change of Control shall not include any voluntarily
transaction that is either (i) accounted for as a "pooling of interests" and in
which Continuing Directors constitute at least one-third of the board of
directors of the combined entity or (ii) approved by a majority of Continuing
Directors and in which it is contemplated that the current management of the
Company would continue to manage the combined company. "Continuing Director"
means any individual who is a member of the Company's Board of Directors on the
date hereof or was designated (before such person's initial election as a
director) as a Continuing Director by two-thirds (2/3) of the then Continuing
Directors. "Affiliate" or "Associate" shall have the meaning set forth in Rule
12b-2 under the Exchange Act.
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2. AGREEMENTS WITH RESPECT TO ESTIS.
2.1 BEST EFFORTS TO SELL ESTIS STOCK. The Company agrees to use its best
efforts to sell or assist Estis in the sale of at least one-half of the Estis
Stock at a price of $2.00 per share or greater. The Company agrees to contact
such investment banking firms and other purchasers concerning the sale of the
Estis Stock as the Company deems appropriate. The Company hereby waives any
transfer restrictions with respect to the Estis Stock contained in the Merger
Agreement in connection with any such sales pursuant to this Section 2.1. If
necessary in connection with such sale, the Company will register or cause to be
registered any such sales in accordance with the terms of the Registration
Rights Agreement between Estis and the Company dated as of August 1, 1997 which
notwithstanding any provision of this Agreement shall survive the consummation
of the transactions contemplated hereby as an obligation of the Company. Neither
Estis nor any other Estis Shareholder will be required to make any
representations or warranties as to business or operations of the Company in any
such sale but Estis and the applicable Estis Shareholder will make any requested
representations and warranties as to the ownership of and title to the Estis
Stock by such Estis Shareholder.
2.2 TERMINATION OF EMPLOYMENT. Estis, the Company and the Operating Sub
agree to terminate the Estis Employment Agreement effective on the later to
occur of December 23, 1998 or seven days after the execution of this Agreement
by Estis (the "Transition Date"). From the date hereof until the Transition
Date, Estis agrees to assist in the transition of a new Chief Operating Officer
and to encourage Company personnel to work with such new officer. On the
Transition Date, the Estis Employment Agreement will be deemed terminated except
as to Article V of the Estis Employment Agreement which shall survive as set
forth in Section 2.3 hereof. On the Transition Date, Estis will resign as (i) an
officer of the Company, (ii) a member of the Executive Committee of the Board of
Directors of the Corporation and (iii) an officer or director of all
subsidiaries of the Company. On the Transition Date, the Company, unless Estis
has revoked his release as set forth herein, shall pay to Estis (i) the
compensation owed to Estis other than a prorata portion of his guaranteed bonus
under Section 3.02 of the Estis Employment Agreement, (ii) the sum of $125,000
as partial compensation for Estis' agreements not to compete against the Company
as set forth herein. Thereafter on each of March 30, June 30 and September 20 of
1999, the Company shall pay to Estis payments of $60,000. The payments set forth
above shall be in complete and total satisfaction of the all of the Company's
obligations to Estis under the Estis Employment Agreement and as the complete
and sole compensation for the termination of his employment with the Company and
the Operating Sub and as compensation for his covenants not to compete set forth
in Article V of the Estis Employment Agreement; provided, however, nothing in
this Section 2.2 shall release (a) any obligations the Company may
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have to Estis under the Company's 401(k) plan or similar benefit plan or (b) any
vested options to acquire shares of Common Stock (but any non-vested options to
acquire Common Stock shall terminate as of the date of this Agreement). Until
the Transition Date, Estis will work out of and be based at the Monroe office of
the Operating Sub and Estis will not be required to devote his entire productive
efforts to the business of the Company or the Operating Sub. Following the
Transition Date, Estis agrees to assist the new Chief Operating Officer of the
Company in the transition and to travel and meet with such new officer field
personnel of the Company and the Operating Sub for a per day fee to be mutually
agreed to by the Parties.
2.3 COVENANTS NOT TO COMPETE. Estis acknowledges that under both the Asset
Purchase Agreement and the Merger Agreement, he agreed not to compete against
the Company or the Operating Sub for a period of five years from August 1, 1997
and that under Article V of the Estis Employment Agreement, he agreed not to
compete against the Company or the Operating Sub for a period of thirty-six
months following the termination of his employment under such agreement. In
addition, Estis agreed that, during the applicable non-competition period, he
would not solicit any employees or customers of the Company or the Operating Sub
(the "Non-Solicitation Provisions" and together with the covenants described in
the preceding sentence, the "Non-Competition Provisions"). Estis further agreed
to keep confidential all of the Company's and the Operating Sub's trade secrets
and confidential information to the full extent set forth in the Estis
Employment Agreement, the Merger Agreement and the Asset Purchase Agreement (the
"Confidentiality Provisions"). The term of the Non-Competition Provisions is
hereby reduced to thirty-six months from the date of this Agreement (subject to
a possible reduction as set forth below). Estis further acknowledges and agrees
that the Non-Competition Provisions, as amended, and the Confidentiality
Provisions are valid, binding and enforceable obligations of Estis and are
enforceable against Estis in accordance with their terms. Upon any Change of
Control (as defined in Section 1.7 hereof) in which the Shareholders of the
Company receive less than $2.00 per share, the Non-Competition Provisions other
than Estis' agreement not to solicit future or current employees of the Company
or its subsidiaries as described in Section 2.4 hereof shall terminate.
Notwithstanding any provision of this Agreement to the contrary, a Change of
Control shall not affect the obligation of Estis to comply with the
Confidentiality Provisions.
2.4 FAILURE TO PLACE OR SELL ESTIS STOCK. If the Company is unsuccessful
in aiding Estis in selling at least one-half of the Estis Stock for at least
$2.00 per share on or before June 30, 2000, then the Non-Competition Provisions
shall cease to be applicable to or enforceable against Estis except that until
the third anniversary of this Agreement, Estis agrees not to, directly or
indirectly, hire or solicit to hire any person who is currently
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an employee of the Company or any of its subsidiaries on the date of this
Agreement or who is an employee of the Company or any of its subsidiaries on
June 30, 2000. An individual will be deemed to be an employee of the Company or
any of its subsidiaries if such person was employed anytime with thirty days
prior to or after the date in question. The Company shall be deemed to have sold
shares of Estis Stock and shall receive credit for sale of Estis Stock, if the
Company finds a buyer who is ready, willing and able to purchase all or a
portion of the Estis Stock for $2.00 per share or greater and Estis or the Estis
Shareholders refuse to sell their shares of Estis Stock to such buyer or fail to
respond to such offer within a reasonable time period set by the proposed buyer.
The $2.00 per share purchase price referred to above and the number of shares of
Estis Stock shall be adjusted for any stock splits, reverse stock splits or
stock dividends by the Company with respect to its Common Stock. The failure to
sell Estis Stock shall not affect the obligation of Estis to comply with the
Confidentiality Provisions.
2.5 REINSTATEMENT OF STANDSTILL PROVISIONS. If prior to December 31, 2001,
the Estis Shareholders either sell or are deemed to have sold (as described in
Section 2.4 above) one-half or greater of the Estis Stock for $2.00 or greater
as set forth in Section 2.4, then the provisions of Section 1.5 of this
Agreement will not lapse on June 30, 1999 or shall be reinstated if such
provisions had previously lapsed and thereafter the Shareholder Group will
comply with and be subject to the restrictions of Section 1.5 of this Agreement
until December 31, 2001.
2.6 DIRECTORSHIP. On the successful placement or sale of one-half of the
Estis Stock on the terms set forth above, Estis agrees to resign as a director
of the Company.
2.7 MISCELLANEOUS ESTIS MATTERS.
(a) DUCK LEASE. The Company and Estis agree that the Lease Agreement
between the Operating Sub and Estis for the lease of hunting property is
hereby terminated.
(b) LIFE INSURANCE AND TRANSFER TO LIMITED PARTNERSHIP. The Company
agrees to transfer to Estis any rights that it may have in any life
insurance being carried on Estis. Estis and one or more Estis Shareholders
may transfer their Estis Stock to a limited partnership so long as such
limited partnership executes an agreement in form and substance
satisfactory to the Company that (i) such limited partnership is bound by
the terms of this Agreement including the releases contained herein and
(ii) that such limited partnership shall take such shares of Estis Stock
subject to any restrictions contained in the Merger Agreement as modified
by this Agreement.
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(c) PERSONAL EFFECTS. The Company agrees that Estis may remove the
personal effects listed on Exhibit "D" attached hereto and incorporated
herein.
(d) DIRECTORS AND OFFICERS POLICY. The Company agrees to use its
reasonable commercial efforts to maintain the existing directors and
officers insurance policy and to renew or obtain a similar policy upon the
expiration of the current policy so long as such insurance is commercially
available to the Company for premiums equivalent to the premiums on the
current directors and officers policy.
(e) AIRPLANE. The Company agrees that Estis, at his sole option, may
purchase that certain airplane owned by the Company (the "Airplane") for
the appraised value of the Airplane as determined by an appraiser selected
by the Company and reasonably satisfactory to Estis (the "Appraiser"). The
Appraiser shall determine the retail fair market value of the Airplane and
the Company shall pay the cost of the Appraiser. Following receipt of the
Appraiser's determination of retail fair market of the Airplane, Estis
shall elect with five business days at whether he shall purchase the
Airplane and shall notify the Company in writing of such determination. If
Estis elects to purchase the Airplane, he shall pay the purchase price
equal to the appraised value in cash or with shares of Common Stock valued
at $1.50 per share. The closing of the purchase and sale of the Airplane
shall take place two business days after Estis' election. At such closing,
the Company will transfer all of its right, title and interest in the
Airplane to Estis for payment of the purchase price in stock or cash;
provided, however, if Estis has elected to sell the Yard Truck to the
Company as set forth below, then Estis shall transfer the Yard Truck to
the Company for its appraised value as determined below and the balance of
the purchase price for the Airplane shall be paid in cash or shares of
Common Stock as set forth above. If Estis does not agree to purchase the
Airplane for its appraised value as set forth above, then the Company may
sell the Airplane for a price equal to or greater than the appraised value
of the Airplane. If the Company desires to sell the Airplane for a price
less than the appraised value of the Airplane, then the Company shall
notify Estis of the proposed price and Estis shall have the option of
purchasing the Airplane for such proposed price on the terms set forth
above, i.e. cash or shares of Common Stock valued at $1.50 per share.
Estis shall have two business days to elect to purchase the Airplane for
such proposed price and if Estis does not elect to purchase the Airplane
for such proposed price, then the Company may sell the Airplane for the
price offered to Estis or higher. If Estis elects to purchase the Airplane
for such proposed price, then the closing of the purchase and sale of the
Airplane shall take place within three business days of such election.
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The Company agrees to use its best efforts to obtain the appraisal of the
Airplane promptly after the execution of this Agreement (subject to
availability of the Appraiser). If Estis elects not to purchase the
Airplane, the Company agrees to diligently market and sell the Airplane in
a commercially reasonable manner.
(f) YARD TRUCK. Estis also has the option to sell to the Company
and the Company agrees to purchase from Estis the yard truck described on
Exhibit "E" attached hereto and incorporated herein (the "Yard Truck") for
an amount equal to the appraised value of the Yard Truck as determined by
an appraiser selected by the Company who shall be reasonably satisfactory
to Estis (the "Truck Appraiser"). The Truck Appraiser shall notify Estis
and the Company of the retail appraised value of the Yard Truck and Estis
shall have the option of selling the Yard Truck to the Company for such
appraised value. If Estis elects to sell the Yard Truck, then Estis shall
notify the Company in writing of such election. If Estis has elected to
purchase the Airplane as set forth above, then the closing of the purchase
and sale of the Yard Truck shall occur on the same date as the closing of
the sale of the Airplane. If Estis has elected not to purchase the
Airplane, then the closing of the purchase and sale of the Yard Truck
shall take place three business days after Estis has made his election to
not purchase the Airplane. At such closing, the Company shall pay cash for
the Yard Truck unless Estis has elected to purchase the Airplane in which
event Estis shall transfer title to the Yard Truck to the Company for a
credit against the purchase price of the Airplane equal to the appraised
value of the Yard Truck.
2.8 RELEASE OF EMPLOYMENT CLAIMS. (a) In consideration of the payments
called for herein effective on the Transition Date and subject to the
performance of the Company's obligations set forth herein, except for the
release in clause (ii) below which shall be currently effective, and the other
releases contained herein, Estis agrees and hereby does completely release,
acquit, and forever discharge the Company, the Operating Sub and their
respective officers, directors and affiliates from any and all past and present
claims, grievances, demands, charges, liabilities, obligations, actions, causes
of action, damages, costs, losses of services, expenses and compensation of any
nature whatsoever, whether based on tort, contract or other theory of recovery,
which Estis now has on account of, or in any way growing out of his relationship
with, severance of relationship with, or separation from the Company, including,
but not limited to, the following:
(i) any and all claims he might have arising under Title VII of the
Civil Rights Act of 1964, as amended (42 U.S.C. ss2000e ET SEQ.);
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(ii) any and all claims he might have arising under the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C.
ss621 ET SEQ.);
(iii) any and all claims he might have arising under the Americans with
Disabilities Act of 1990 (42 U.S.C. ss12101 ET SEQ.);
(iv) any and all claims he might have arising under the Texas Commission
on Human Rights Act (TEX. LAB. CODE ss21.001 ET SEQ.);
(v) any and all claims he might have arising for any breaches of the
Employee Retirement Income Security Act, as amended (29 U.S.C.
ss1001, ET SEQ.);
(vi) any and all claims he might have arising under the Older Workers'
Benefit Protection Act (29 U.S.C. ss626);
(vii) any and all claims he might have arising under the Fair Labor
Standards Act (29 U.S.C. ss201 ET SEQ.);
(viii) any and all claims he might have arising under Chapter 451 of the
Texas Labor Code, formerly TEX. REV. CIV. STAT. ANN. art. 8307c; and
(ix) any and all statutory and/or common law claims arising solely and
exclusively out of his employment by the Company, whether or not
specifically alleged or articulated herein but to include slander,
libel, negligence, gross negligence, negligent supervision or
training, conspiracy, intentional infliction of emotional distress,
mental anguish, invasion of privacy, assault, battery, false
imprisonment, tortious interference with contractual relations,
breach of contract and/or breach of implied covenant of good faith
and fair dealing.
(b) Estis hereby acknowledges and agrees that the release set forth above
is a general release and he further expressly waives and assumes the risk of any
and all claims for damages which exist as of the date this Agreement is signed
but of which he does not know or suspect to exist, whether through ignorance,
oversight, error, negligence, or otherwise, and which, if known, would
materially affect Estis' decision to enter into this Agreement. Estis further
agrees that he has accepted payment of the sums specified herein as a complete
compromise of matters involving disputed issues of law and fact and that he
assumes the risk that the facts or law may be otherwise than he believes. It is
understood and agreed by the parties that this Agreement is a compromise of all
doubtful and disputed claims, and the payments are not to be construed as an
admission of liability on the part of
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the Company, by whom liability is expressly denied.
(c) As to the release provided in clause 2.8(a)(ii) above, Estis
acknowledges that he has fully informed himself of the terms, contents,
conditions and effects of this Agreement. Estis further acknowledges the
following that he has waived any requirement that this release be provided to
him 21 days in advance of his execution of this Agreement; that he has been
advised to consult with an attorney prior to executing this Agreement; that he
is over the age of eighteen (18) years, of sound mind and otherwise competent to
execute this Agreement; and that he is entering into this Agreement knowingly
and voluntarily and without any undue influence or pressures.
(d) Estis and the Company acknowledge that Estis has seven (7) days
following the execution of this Agreement to revoke the Agreement. Any such
revocation by Estis must be in writing and received by the Company at its
offices located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201 on or
before the seventh calendar day after he has executed this Agreement.
3. PAYNE.
3.1. TERMINATION OF EMPLOYMENT. Payne, the Company and the Operating Sub
agree the Payne Employment Agreement is hereby terminated on the date hereof on
the terms set forth below except as to Article V of the Payne Employment
Agreement which shall survive the termination of such agreement. On December 23,
1998 (assuming Payne does not revoke the release set forth in Section 3.3
hereof), the Company shall pay to Payne (i) the compensation owed to Payne under
the Payne Employment Agreement other than a prorata portion of his guaranteed
bonus under Section 3.02 of the Payne Employment Agreement and (ii) the sum of
$69,583 as compensation for his covenant not to compete against the Company or
the Operating Sub as set forth in Article V of the Payne Employment Agreement.
Thereafter on each of February 28, May 30 and August 30 of 1999 the Company
shall pay to Payne payments of $37,500 as additional payments for his covenants
not to compete against the Company or the Operating Sub as set forth in Article
V of the Payne Employment Agreement. The payments set forth above shall be in
complete and total satisfaction of the all of the Company's obligations to Payne
under the Payne Employment Agreement and as the complete and sole compensation
for the termination of his employment with the Company and the Operating Sub and
as compensation for his covenant not to compete set forth in Article V of the
Payne Employment Agreement; provided, however, nothing in this Section 3.1 or
this Agreement shall release or terminate (a) any obligations the Company may
have to Payne under the Company's 401(k) plan or similar benefit plan or (b) any
vested options to acquire shares of Common Stock (but any non-vested options
shall terminate as of the date of this Agreement). Payne acknowledges and agrees
that the provisions of Article V of the Payne Employment
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Agreement as amended are valid, binding and enforceable obligations of Payne and
are enforceable against Payne in accordance with their terms. The Company agrees
that Payne may remove the personal effects listed on Exhibit "F" attached hereto
and incorporated herein.
3.2 DIRECTORSHIP. Payne hereby resigns as (i) an officer and director of
the Company and (ii) as an officer and director of any subsidiary of the
Company.
3.3 RELEASE OF EMPLOYMENT CLAIMS. (a) In consideration of the payments
called for herein effective on the Transition Date and subject to the
performance of the Company's obligations set forth herein, except for the
release in clause (ii) below which shall be currently effective, and the other
releases contained herein, Payne agrees and hereby does completely release,
acquit, and forever discharge the Company, the Operating Sub and their
respective officers, directors and affiliates from any and all past and present
claims, grievances, demands, charges, liabilities, obligations, actions, causes
of action, damages, costs, losses of services, expenses and compensation of any
nature whatsoever, whether based on tort, contract or other theory of recovery,
which Payne now has on account of, or in any way growing out of his relationship
with, severance of relationship with, or separation from the Company, including,
but not limited to, the following:
(i) any and all claims he might have arising under Title VII of the
Civil Rights Act of 1964, as amended (42 U.S.C. ss2000e ET SEQ.);
(ii) any and all claims he might have arising under the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C.
ss621 ET SEQ.);
(iii) any and all claims he might have arising under the Americans with
Disabilities Act of 1990 (42 U.S.C. ss12101 ET SEQ.);
(iv) any and all claims he might have arising under the Texas Commission
on Human Rights Act (TEX. LAB. CODE ss21.001 ET SEQ.);
(v) any and all claims he might have arising for any breaches of the
Employee Retirement Income Security Act, as amended (29 U.S.C.
ss1001, ET SEQ.);
(vi) any and all claims he might have arising under the Older Workers'
Benefit Protection Act (29 U.S.C. ss626);
(vii) any and all claims he might have arising under the Fair Labor
Standards Act (29 U.S.C. ss201 ET SEQ.);
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<PAGE>
(viii) any and all claims he might have arising under Chapter 451 of the
Texas Labor Code, formerly TEX. REV. CIV. STAT. ANN. art. 8307c; and
(ix) any and all statutory and/or common law claims arising solely and
exclusively out of his employment by the Company, whether or not
specifically alleged or articulated herein but to include slander,
libel, negligence, gross negligence, negligent supervision or
training, conspiracy, intentional infliction of emotional distress,
mental anguish, invasion of privacy, assault, battery, false
imprisonment, tortious interference with contractual relations,
breach of contract and/or breach of implied covenant of good faith
and fair dealing.
(b) Payne hereby acknowledges and agrees that the release set forth above
is a general release and he further expressly waives and assumes the risk of any
and all claims for damages which exist as of the date this Agreement is signed
but of which he does not know or suspect to exist, whether through ignorance,
oversight, error, negligence, or otherwise, and which, if known, would
materially affect Payne's decision to enter into this Agreement. Payne further
agrees that he has accepted payment of the sums specified herein as a complete
compromise of matters involving disputed issues of law and fact and that he
assumes the risk that the facts or law may be otherwise than he believes. It is
understood and agreed by the parties that this Agreement is a compromise of all
doubtful and disputed claims, and the payments are not to be construed as an
admission of liability on the part of the Company, by whom liability is
expressly denied.
(c) As to the release provided in clause 3.3(a)(ii) above, Payne
acknowledges that he has fully informed himself of the terms, contents,
conditions and effects of this Agreement. Payne further acknowledges the
following that he has waived any requirement that this release be provided to
him 21 days in advance of his execution of this Agreement; that he has been
advised to consult with an attorney prior to executing this Agreement; that he
is over the age of eighteen (18) years, of sound mind and otherwise competent to
execute this Agreement; and that he is entering into this Agreement knowingly
and voluntarily and without any undue influence or pressures.
(d) Payne and the Company acknowledge that Payne has seven (7) days
following the execution of this Agreement to revoke the Agreement. Any such
revocation by Payne must be in writing and received by the Company at its
offices located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201 on or
before the seventh calendar day after he has executed this Agreement.
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4. AGREEMENTS OF HACL AND ENERGY INVESTORS.
4.1 VOTING AGREEMENT. Each of HACL and Energy Investors agree to vote the
shares of Common Stock held by such shareholder in favor of the election of
Estis (or if Estis elects not to run, then Gregory) and Smith as directors of
the Company at the 1999 annual meeting of the shareholders of the Company.
4.2 TAGALONG. If either HACL or Energy Investors proposes to sell any of
their shares of Common Stock ("Disposing Shareholder"), then such Disposing
Shareholder shall notify Estis and the Estis Shareholders of the terms of such
sale in a written notice to Estis setting forth the terms of such sale (the
"Offer Notice"). Estis and the Estis Shareholders shall have the right within
ten (10) days of such notice to elect to participate in such sale ("Accepting
Shareholder") by notifying the Disposing Shareholder of such intent. Upon
receipt of a notice from an Accepting Shareholder, the Disposing Shareholder
shall allow such Accepting Shareholder to dispose of such Accepting
Shareholder's pro rata share of Common Stock (based on the total number of
shares of Common Stock owned by the Accepting Shareholder(s) and the Disposing
Shareholder in relation to the total number of shares of Common Stock to be
sold) on the same terms as contained in the Offer Notice. Upon delivery of the
notice referred to above, each Accepting Shareholder shall be obligated to sell
their pro rata share of their shares of Common Stock to the purchaser specified
in the Offer Notice. The co-sale rights set forth in this Section 4.2 shall
terminate on the earlier of (i) when the Estis Shareholders have sold or are
deemed as set forth herein to have sold one-half of the Estis Stock, (ii)
December 31, 2001 or (iii) upon Estis or any Member of the Shareholder Group
taking any actions inconsistent with or which would be in violation of Section
1.5 hereof whether or not the Standstill Period is then in effect.
5. AGREEMENT TO NOMINATE. The Company agrees to nominate Estis (or if
Estis elects not to run, Gregory) and Smith as directors for the 1999 annual
meeting of the Company's shareholders and to solicit proxies for the election of
such persons.
6. CONFIDENTIALITY. To the maximum extent permitted by law and subject to
the Company's obligations as a reporting company under the Exchange Act and as a
company listed on the American Stock Exchange and as required by law including
filings required under the Exchange to be made with the Securities and Exchange
Commission, the Parties agree to keep confidential the terms of this Agreement
and the matters raised in the November 10 Letter and the Lawsuit. In accordance
with the Parties' agreement to seal the petition in the Lawsuit, the Parties
each agree not to provide copies of such petition to persons or to discuss the
contents of such petition with any person.
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7. REPRESENTATIONS AND WARRANTIES.
7.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Each of Company and the
Operating Sub hereby represents and warrants to the Members as follows:
(a) The Company and the Operating Sub are corporations duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation and have taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Operating Sub and constitutes the legal, valid and
binding obligation of each of the Company and the Operating Sub, enforceable
against each of them in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) The execution and delivery of this Agreement by the Company and the
Operating Sub do not, and the performance by the Company and the Operating Sub
of their obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
lien upon any of the assets or properties of the Company and the Operating Sub
under, any of the terms, conditions or provisions of (A) the certificates or
articles of incorporation or bylaws of the Company or the Operating Sub or (B)
(x) any law or order of any Governmental or regulatory authority applicable to
the Company or the Operating Sub or any of their respective assets or
properties, or (y) any contract to which the Company or the Operating Sub is a
party or by which the Company or the Operating Sub or any of their respective
assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of liens which, individually or in
the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of the Company and the Operating Sub to consummate the
transactions contemplated by this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER GROUP. Each Member
of the Shareholder Group represents and warrants to the Company and the
Operating Sub that:
(a) Such Member of the Shareholder Group has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all action necessary to authorize the
execution, delivery and performance of this Agreement.
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(b) This Agreement has been duly authorized, validly executed and
delivered by such Member and constitutes the legal, valid and binding obligation
of such Member, enforceable against such Member in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by such Member does not,
and the performance by such Member of his obligations hereunder will not,
require any filing by such Member with, or any permit, authorization, consent or
approval of, any governmental or regulatory authority or any third party other
than an amendment to Schedule 13D and Form 4 and/or Form 5. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Member is a trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by such Member of
the transactions contemplated hereby.
(d) Such Member is not aware of any insider or preferential transactions
between the Company and any other members of the board of directors of the
Company that are not on arms length terms or otherwise fair to the Company.
7.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP. Each member of
the Company Group represents and warrants to the Members of the Shareholder
Group that:
(a) Such member of the Company Group has all requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all action necessary to authorize the execution, delivery
and performance of this Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by such member of the Company Group and constitutes the legal, valid
and binding obligation of such member, enforceable against such member in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting enforcement of creditors'
rights generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by such member of the
Company Group does not, and the performance by such member of his obligations
hereunder will not, require any filing by
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such member with, or any permit, authorization, consent or approval of, any
governmental or regulatory authority or any third party other than an amendment
to Schedule 13D and Form 4 and/or Form 5. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which such member is
a trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by such member of the transactions contemplated
hereby.
8. MISCELLANEOUS.
8.1 NOTICES. All notices, requests or instruction hereunder shall be in
writing and delivered personally or sent by registered or certified mail,
postage prepaid or by telecopy (or like transmission), as follows:
(1) if to the Company:
OEC Compression Corporation
2501 Cedar Springs Road, Suite 600
Dallas, TX 75201
Attention: President
Fax: (214) 953-9584
with a copy to:
Kyle Longhofer, Esq.
Schlanger, Mills, Mayer & Grossberg, LLP
5847 San Felipe, Suite 1700
Houston, TX 75201
Fax: (713) 785-2091
(2) if to any other Party at its or his address set forth in
the records of the Company and in case the case of the
Shareholder Group or any Member of the Shareholder Group
with a copy to:
Eddy J. Rogers Mayor, Day, Caldwell & Keeton, LLP 700
Louisiana, Suit 1900 Houston, TX 75201 FAX (713)
225-7047
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices and other communications given
to any party hereto in accordance with the provisions hereof shall be deemed to
have been given on the date of receipt, provided that any notice or other
communication that is received other than during regular business hours of the
recipient shall be deemed to have been given at the opening of business on the
next business day of the recipient.
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8.2 ENTIRE AGREEMENT This Agreement together with the Merger Agreement,
the Asset Purchase Agreement, and the agreements and documents executed in
connection with the consummation of the Purchase Transaction contain the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and supersede and amend all prior understandings,
arrangements and agreements with respect to the subject matter hereof. No
modification hereof shall be effective unless in writing and signed by the Party
against whom it is sought to be enforced. The Parties may, by written agreement,
make any modification or amendment of this Agreement, but no such modification
or amendment will be effective unless signed by all of the Parties. The captions
appearing herein are for the convenience of the parties only and shall not be
construed to affect the meaning of the provisions of this Agreement. Except as
specifically set forth herein, nothing in this Agreement is intended to release,
amend or modify any of the rights of the Parties under the Merger Agreement or
Asset Purchase Agreement or the documents executed in connection with the
consummation of the Purchase Transactions.
8.3 BEST EFFORTS. Each of the Parties shall use such party's reasonable
best efforts to take such actions as may be necessary or reasonably requested by
the other Parties hereto to carry out and consummate the transactions
contemplated by this Agreement. No Party to this Agreement shall directly or
indirectly (i) challenge the validity or enforceability of any provision of this
Agreement or the matters contemplated hereby or (ii) commence any lawsuit or
other legal proceeding, or take any other action, that seeks to frustrate the
performance of this Agreement in accordance with its terms.
8.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable in the case of
agreements made and to be performed entirely within such State.
8.5 INJUNCTIVE RELIEF. Each of the Parties recognizes that any breach of
the terms of this Agreement may give rise to irreparable harm for which money
damages would not be an adequate remedy, and accordingly agree that, in addition
to other remedies, any nonbreaching Party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce the terms and provisions of this Agreement by a decree of specific
performance in any action instituted in any court of the United States or any
state hereof having jurisdiction without the necessity of proving the inadequacy
as a remedy of money damages.
8.6 BINDING EFFECT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties and their respective
successors, heirs, legal representatives and permitted assigns, but neither this
Agreement nor any of the rights, interests, or obligations hereunder may be
assigned by any of the Parties without the prior written consent of the other
parties and any such attempted assignment without consent shall be void.
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8.7 THIRD PARTY BENEFICIARIES. This Agreement is not intended, and shall
not be construed, to confer any rights or remedies hereunder upon any party
other than the Parties.
8.8 SEVERABILITY Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or any such terms in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
8.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
8.10 EXPENSES. Except as provided in Section 1.6 herein, the Shareholder
Group shall bear their own expense with respect to the transactions contemplated
by this Agreement. The expenses of the Company Group in the preparation of this
Agreement shall be born by the Company.
8.11 TAXES. Notwithstanding any provision of this Agreement to the
contrary, the Company may withhold or deduct any taxes or amounts required by
applicable law to be deducted or withheld from any payments required to be made
under this Agreement as to the amounts being paid to Estis and Payne under
Sections 2.2 or 3.1 of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
OEC COMPRESSION CORPORATION
BY_________________________
NAME:______________________
TITLE:_____________________
OUACHITA ENERGY CORPORATION
BY_________________________
NAME:______________________
TITLE:_____________________
-22-
<PAGE>
COMPANY GROUP
________________________
RAY C. DAVIS
________________________
KELCY L. WARREN
________________________
MATTHEW S. RAMSEY
________________________
JACK D. BRANNON
________________________
RICHARD D. BRANNON
________________________
JAMES D. FINLEY
________________________
NEAL A. HAWTHORN
________________________
JON P. STEPHENSON
HACL
HACL, LTD.
by Six-Da Waco, Inc., general partner
BY_________________________
NAME:______________________
TITLE:_____________________
ENERGY INVESTORS
ENERGY INVESTORS
BY_________________________
NAME:______________________
TITLE:_____________________
SHAREHOLDER GROUP
________________________
DENNIS W. ESTIS
________________________
ANDY PAYNE
-23-
<PAGE>
________________________
DON SMITH
________________________
ROBERT GREGORY
-24-
